Oil prices could rise in 2023, supported by a recovery in demand amid tight supply. Leading this movement would be China and Russia: here’s why.
Oil prices on the rise in 2023? Next year could see the leap, with sanctions squeezing Russian supplies and demand exceeding expectations.
This was stated by the International Energy Agency, thus highlighting the increasingly decisive roles of China and Russia in the trend of the oil market. OPEC also forecast a rebound in demand over the next year, with US rate hikes expected to ease along with slowing inflation.
Specifically, Russian output, which defied the agency’s previous collapse forecasts this year, is set to slump 14% by the end of the first quarter, the IEA said in a report Wednesday. If this estimate holds true, it could reverse the recent trend in oil futures, which fell to $80 a barrel in London after the worst weekly slump in four months.
What about China? It will be decisive in boosting consumption, thus widening the supply-demand gap and laying the foundations for an increase in prices. Oil skyrocketing in 2023? What to expect?
Oil price: jump in 2023? The role of Russia
From a crude supply perspective, the big one observed in 2023 will still be Russia.
The IEA acknowledged that Russian exports continued to grow despite repeated predictions that an international boycott would drastically reduce shipments. Moscow’s oil sales rose to a seven-month high of 8.1 million barrels a day in November, even as revenue fell on lower prices, according to the report.
Russia’s resilience has also contributed to shallower-than-expected cuts from OPEC+, the IEA said. The 23-nation group led by Saudi Arabia cut supplies last month by just a quarter of the 2 million barrels per day it had announced, as many members were already pumping below designated quotas.
However, global markets are on track to tighten in 2023. Russian production will finally start to sag this month as European Union sanctions force the country to stop around 400,000 barrels a day, the agency predicts.
Production will decline from current levels of about 11.2 million bpd to 9.6 million bpd by the end of the first quarter, according to the report. Putin said last week that he would cut production rather than sell to buyers at the G-7 price cap (the price cap for Russian crude is $60 a barrel).
China’s effect on oil demand in 2023
Looking ahead to 2023, OPEC said it expects oil demand to grow by 2.25 million barrels per day (bpd) over the next year to 101.8 million barrels per day , thanks to the potential rise in consumption from China, the world’s main importer.
The IEA, sees the Dragon’s oil demand recover next year after a 400,000 barrels per day contraction in 2022, raising its estimate of 2023 crude demand growth to 1.7 million barrels per day, for a total of 101.6 million barrels per day.
Meanwhile, buoyant diesel consumption in emerging economies suggests that global oil demand will grow at a faster pace next year than previously estimated.
India has led the expansion in recent months, but will be overtaken by China again next year as the Asian giant emerges from tough "Covid Zero" restrictions, the IEA said.
Original article published on Money.it Italy 2022-12-14 15:27:35. Original title: Prezzo petrolio: sorpresa in rialzo nel 2023, grazie a Russia e Cina
